What 12 Years at Citi Taught Anchorage's AJ Macey About Digital Asset Settlement

We got AJ coming in the show right now. AJ, Macy, thanks for joining us, man. Welcome to Stable Dash Live. How's it going? Zach, thank you for having me. Appreciate the time. Awesome. Glad to be here. Love it. Love it. Love it. Okay. Also, appreciate your flexibility. I know we've, like, whiffed a couple times on on getting it, but we're here. We are We made it. We're live, and we're gonna make this great. Excellent. So we

Zach, have we covered anyone from Anchorage yet? This might be first. Is is a first, and I think we've been I remember even at you know, you put on your BD hat, I think, at a very stable conference trying to trying to get somebody from Anchorage on. So this is a this is a full circle We gotta do it. For us. So we we appreciate that, AJ. Excellent. Well, I'm happy to be here and happy to represent Anchorage, and our marketing team was very happy to to to join the pot the show. It's great. I love it. Awesome.

AJ Well, I Anchorage is huge. Like, where do you sit within this organization? What's your mandate? Maybe bring us into your I was even just gonna say, if you go to your LinkedIn, you see Citi and then Anchorage. So, you know, we've seen a lot of people, you know, they spent two years here, three years here, and then make it full circle. It looks like you had this well established career at Citi. And then leave Citi from, like, years. I mean, that's a that's probably a fun story.

Yeah. I can I can why don't I give you a little bit of a mix of my story and the Anchorage story, and we'll kind of jive those things together, and I'll set the stage to talk about Atlas and coordinating multi party settlement? But yeah. Totally. So, yeah, AJ Macy here. I lead the Atlas business in Anchorage Digital. I've been at it for about four years at Anchorage. It's been a great experience. You know, for those who don't know who are listening in, like, what is Anchorage?

Like, we're a regulated crypto platform. Right? We're really built to get institutions one place to do all the things they need in digital assets. Guys, So, this is custody trading, staking governance settlements, fiat banking, stablecoin issuance, Atlas, which we'll talk about today. And, really, the foundation of all of this is Anchorage Digital Bank NA. That's the you know, we're still the first fairly chartered we are the first fairly chartered crypto bank in The US. Got that OCC charter back in 2021.

So for the past five years or so, we've been at this operating up to that standard. We're global. We have Anchorage Digital Singapore. This sort of runs alongside the bank, has equivalent security and service standards, and we offer, like, a wide breadth of product. This is tokenized assets, custody for BlackRock Biddle, for example. We're doing stablecoin issuance for Tether, Western Union, Athena, Falcon Finance, and I live in the Atlas part of the part of the business.

That's really our institutional infrastructure or business and settlement network. That's where the CMS sits. So in short, Anchorage is just was really this integrated financial services company that, since I've been here, has grown and become, you know, a really interesting platform for institutions to come and do their digital assets business. So like you guys mentioned, you know, I spent my entire career only at Anchorage and Citigroup.

And the twelve years I was at Citi or thirteen years almost, most of the time I was there, I was within the FX business in the institutional clients group. And I spent a bit of time doing macro flow sales. And then the second half of the time, they're doing electronic sales and trading. And this this sort of background, I think, is important, and it's helped inform a lot of the things I'm working on now. So I'll I'll give you a bit of a story here if you entertain me.

But when I first joined the FX business at Citi, a lot of transactions were like voice brokerage. You pick up the phone, make a price in €50, put the phone down, do it again. But during my time in the FX business, the market really started to electronify. We had the emergence of single bank trading platforms. We had clients aggregating liquidity. We saw the emergence of algo execution solutions.

And really importantly, and importantly for the purposes of this conversation, channels like ECNs, EBX, Kernix, Reuters, three sixty t, the way FX traded became very electronified and very much so on these ECN exchange like channels. Right? So my time in FX, I really saw kind of the development of market infrastructure, and I got really interested in kind of the how part of FX markets, and that's really what we do in Atlas. It's sort of like this markets infrastructure play.

I gotta tell you how I caught the crypto bug because that's always what you do on these sorts of things. I was sitting next to a guy named Josh. She's like, hey. You should open up open up a Bitrix account, and look at this thing, Neil. Look at this thing, XMR. Yeah. You can trade Bitcoin and ETH in your PA. So, you know, I really came to digital assets, you know, through the through the trading experience. So that was 2017. Roll it forward to '22. You know, FX was becoming highly commoditized.

I wanted to make a jump to make crypto my professional thing. And I found Anchorage because it offered me a chance to go to a firm that had a lot of experience, was mature in the space. Like, we have a federally chartered bank. Right? But we're we're entrepreneurial. We're innovative. There's lots of cool things happening here. So that was a good fit for me at the time, and that's really that's how I made the jump over and, you know, how I came, I guess, to be talking to you all today. So Bring us into yeah,

man. It's it's it's cool to see just the conviction and, you know, going going head first into this. Anchorage has been such a incredible, I I guess, adult in the room would be the the way I would say it of just, like, doing things the right way,

building an incredible team. Everyone we meet there is just top notch. There's an interesting tension, though, and a healthy tension, I think, too with being so ingrained still within the the broader DeFi ecosystem. But like you said, Drew, being being the adults in the room.

Yeah. Yeah. Totally. I mean, a lot of what I focus on is, you know, more institutional capital markets, infrastructure use cases. But, you know, Anchorage's bread and butter is really across client segments. We still do tons of work in the the very protocol native space and support venture capital firms. So we cover this really wide breadth of client type as well, which is super exciting and interesting.

Yeah. So you have Anchorage Digital Bank, again, federally chartered bank, first federally chartered bank, who is now able to I mean, crypto settlement, stablecoin settlement is such an incredible use case for these tools. Bring us into Atlas and where that specific product fits. And, also, I think just framing it in the in the the way that you would frame it to an operator or a builder right now and Sure.

How they should think about the difference maybe between going to Anchorage for more of its, like, commonly known use cases around custody versus what Atlas is and and the maybe similarities or differences there. I'm sure it's, you know, using a lot of the stuff internally but positioned very differently.

Yeah. That's a really good way to frame that question. So if you'll also allow me, I'll give a little bit of a history lesson on Atlas, and that kind of gets at, like, how it jives with the custody stack and whatnot. So, you know, Atlas really got its start, you know, a few years back. This was post FTX and the bear market that followed. Clients, market participants were worried about risks in the market, counterparty credit exposure, exposure to exchanges.

And Anchorage, as, you know, this federally chartered institution providing custody services, saw kind of a gap or a way to step into the market and build a settlements product that allows for operational efficiency, operational safety, and counterparty credit risk mitigation to our custodial platform. Two Anchorage custody clients are part of the Atlas network.

They can facilitate transactions or movements or settlements of assets between each other in a really operationally efficient way and, importantly, in a simultaneous fashion. So in traditional markets, you have PVP, DVP. You know, assets can be simultaneously swapped through the Atlas network such that that counterparty credit risk mitigant happens. This all sits atop that custody stack, gents.

Whether you're on ADB, the bank in The US, or ADS out of Singapore, Anchorage custody part Atlas network participants can interface with each other, interact with each other through this settlements rail. Settlements was the first bit. That, in my mind, is this primitive that sits atop the custody stack. You know, a lot of what I focus on is capital markets use cases, but Atlas as a primitive Atlas as a settlements primitive can be used for post TG protocol token distributions.

It's embedded in some of our stables rewards programs and and stables program overall. So this settlements primitive can be extended out to use cases that are not just over the counter spot settlements. It's it's it's purpose built for sort of any sort of use case that requires operational efficiency, operational safety sitting atop anchorage custody. The settlements rail network was first. Roll this forward.

We're building things atop that, all with that same premise on reducing counterparty credit risk, increasing operational efficiency, and building capital efficiency into our products for our institutional users. And that's really where we get to CMS and some of the other products that are built atop the settlements rail. And those products really are the coordinated multi party settlements.

Anchorage has a robust trilateral custody and collateral management business, and we're working with the vertically integrated exchanges as well. I know the focus today is CMS, so I can break into that, but I'm happy to come back and dive into some more of these segments as well, Savannah. No. It's great. There's there's so much to do this. Like, we were yeah. I was just about to ask about this. So collateral management,

maybe maybe walk us through as we frame Atlas, like, what those initial build steps have been versus maybe some of these newer things that you're now rolling out, like this collateral management piece? Where where where are the kind of where is the core building blocks? Like, what were those? And now, like, give us a taste of what's coming next. Totally. So that core that core building block is that regulated, highly secure custody.

All of these products are built atop that as the core stack. You know, layer on that settlements primitive. The settlements primitive is a way we use this as a mechanism for asset movements, whether that's, you know, a client using it directly or built within our collateral management system, for example. Atop the settlements primitive, we're building a a full blown collateral management business.

If you're launching a secured lending business or wanna make a loan against Bitcoin, you could outsource that programming to Anchorage Digital. We'll you can bring us on. We'll calculate LTVs, do mark to markets, liquidations, etcetera. So that collateral management stack is really purpose built for secured transactions in the market. That's how we kind of think about things. Custody is the base layer. You have Atlas Spot settlements in the settlements layer.

And then collateral management, the CMS, and other things that we're working on the Atlas business are sort of built atop those layers. So that's kinda how I like to think about it. And and give us a glimpse of some of these partners. It looks like you guys have been able to involve some really amazing partners in this in the in the journey here, leading firms, Cantor Fitzgerald, Spark, Camino.

Who else is kind of when you think about the those in the trenches with you who are really

best fit and best suited to utilize the benefits of this. Like, what have those companies what have they looked like, and and what have they been what have they been up to with you guys? Yeah. It's it's really cool, and I'm glad you called those names out. Those are some some really great partners. And the way we think about, you know, offering these trilateral custody and collateral management services is, you know, we wanna serve both ends of kind of this continuum.

There's very traditional players, like, on one side of the continuum, very DeFi native players on the other side, and sort of firms, like you mentioned, Spark, are kind of in between that do a lot of very crypto native things and more traditional things at the same time. So the collateral management stack is purpose built to serve both sides of that spectrum. Traditional firms have different needs and different expertise.

DeFi platforms and the services we provide for those platforms, they have different needs and different specialties,

but they all can kinda fit within this construct in an interesting way. So I describe this continuum as sort of u shaped, where you'd think the traditional market firms and DeFi platforms are very dissimilar. They are in a lot of ways, but they can use our service in a way that's more similar than one would think. So we can cover, like, kind of a wide array of use cases through the through the collateral management stack and system we're building. I I'd love to dive into more more of the CMS.

I'm I'm thinking through the phrase that we've heard a lot lately. You know, we may say crypto and then TradFi, and then there's a lot of people coming out there just like, it's just finance. And I've even I'm even thinking about in your professional term, maybe how the chain the term digital asset is evolving. You know, it used to be very clear that when you said digital asset, you meant things like trading Bitcoin and Ethereum and and Solana.

But now we're seeing with the rise of tokenized equities and even forex coming on chain that a digital asset is more akin to the, you know, these traditional products that are now just on chain. So maybe help us break down CMS, what it enables, and where it fits into the market today as far as trading and where maybe you see it going, you know, as more and more of, you know, equities are coming on chain and other other financial products.

Yeah. Totally. I'm gonna I'm gonna start with CMS, and then I think the second the first part of your question, I'll kinda get to Yeah. By the end here. So Perfect. You know, what is CMS? CMS is stands for coordinated multi party settlement. And what does the CMS allow for? The CMS allows for prime brokers or prime service firms who intermediate access and credit for their end customers to trade on noncustodial exchanges and ECNs.

So CMS is really the settlements infrastructure and custodial layer that allows these prime service firms to sponsor access to noncustodial venues. This model is very different, right, than the traditional thing we're used to in crypto, which is these vertically integrated stacks where the exchange custodian settlement agent typically are the same thing. Traditional markets players are used to the model that we're building towards in CMS, where there's this modularization of roles and responsibilities in the system.

And the CMS real provides that settlement custodial infrastructure layer that looks a lot like FX or fixed income that traditional firms are used to when they're interfacing with the market. So we built this thing really starting thinking about it about a year ago as the sort of regulatory clarity was coming in The US. Firms were talking about onshoring of spot crypto trading activity.

We wanted to build a system sort of using all those same guiding principles that Atlas is grounded, counterparty credit risk mitigation, capital efficiency, and the like, and to support what we think is a burgeoning way spot crypto will trade in the market. So that's really how it got its start. Right now, you know, it's it's the first sort of iteration or use case here is for spot activity through noncustodial venues. But you can extend this out into the future.

You know, this thing could support other ATSs or cleared scenarios where you swap out an FCM for a prime broker, and this all sort of fits in the same package. So Mhmm. Yeah. That's why we built it. And really what it does at its core, which makes it powerful, is it allows many exchanges and many primes to interface in such a way that you achieve netting across these venues and across primes.

So you wanna have a high percentage of netting that translates into a low percentage or a low amount of on chain transactions. So you're achieving this netting and efficiency. And the way it's designed is that any participant within the CMS, primes who are interfacing with each other, extending bilateral credit to each other, it has that same sort of settlement principle. It's it's simultaneous such that neither party risks principal loss to each other.

They risk some replacement cost or mark to market risk on the event of a default, but we can also solve that through some of our other products. The same prime as using CMS can be using our tri party product. They can make a pledge of assets to secure a bilateral limit under a control agreement framework, all within the same sort of Atlas wrapper, Atlas ecosystem.

So this thing at its core was purpose built now for Primes offering access to spot trading venues, but you can extend this out as other assets come on chain, as other models take hold, whether that's cleared models, ATSs, the like. So so we think it's purpose built for now and, you know, that sort of future that that you guys were alluding to as

more things come on chain. How should this think about this, like, in this world of, you know, you open up your timeline lately, and it's like Hyperliquid. Hyperliquid's popping up everywhere. What what is the paradigm to think about, like, a decentralized exchange like Hyperliquid?

And then what's what Atlas CMS enables, you know, people to build? Yeah. I think I think, you know, first thing I'd say is, like, we're very happy that there's many types of bottles popping up in the market. So we wanna partner with the the hyper liquids, the hyper lens of the world. We wanna partner with the more traditional style exchange partners. You know, the first one we announced was SpotX, who's coming to market on the CMS. They're an f an FX shop that's done billions and billions of dollars of transactions.

They understand this. Shout to the SPOTX guys who were announced with us last week. So what I would say is we wanna support all these models, and Atlas is building towards giving institutional clients, like meeting them where they are.

So whether trading on a non custodial, more traditional exchange, interfacing with a DeFi channel like a Hyperliquid, whether that's interfacing with a more traditional lender for collateral management or a DeFi platform in that sense, we're building towards we're meeting our clients where they are. We're giving them the tools they need to feel comfortable with the models that they're used to and comfortable with the models like, new models that are coming to the market that are super interesting.

So I guess the point is, you know, we're not limiting ourselves at Anchorage and with the things that we're building. We're building towards supporting all sorts of implementations, trading use cases, etcetera, and meeting clients and institutions where they are as it relates to how they wanna access markets. AJ, so stepping back here a little bit, macro, you spent

nearly thirteen years at Citi. Yeah. A lot of what we're talking about in terms of how it's structured and the benefits that institutions get reminds me of what you would imagine a, like, a traditional banking network.

Like, how the benefits of how money, capital, lending, like, all of these the complex financial operations, it's like, oh, as long as you're using this banking network or this banking system, because everyone's kind of a member and there's a there's a, you know, closed network here, you get what sounds like some of these benefits, which has existed, I'm sure, as you've seen in traditional markets with traditional finance, but it's been siloed and and gated in some ways.

Like, how do you see the, like, the form and the function of this evolving now? Because what we're talking about is from first principles built using on chain primitives, what are the similarities and differences? Like, things that you saw back when you were at Citi and what what doesn't need to like, the stuff that works Yeah. And the models that exist. A good framing. We obviously think like, oh, let's tear it down and build the That's not like bad. Like, that's great. You know?

It's it it's it's just different in terms of how we should be thinking about it. How do how do you see the similarities?

Yeah. It's it's honestly, it's really similar. You know, what we're building is quite similar to what has existed, and I don't think we're trying to, you know, say we need to build like, burn the house down and rebuild it. We're using the learnings that, you know, I kind of lived through in the FX business where, you know, you would execute an FX transaction.

It would be given up to a prime broker, or that prime broker would be intermediate intermediating access to a trading venue either on a principal basis or for an end client. So these things these things kind of exist already. The big the big FX, you know, sort of market gold star standard is like CLS, for example. That's how all currencies settle essentially, all major currency pairs settle.

So we're trying to take pieces of best practices in the market, build them into our product, and really upgrade that infrastructure, like you said, through the usage of blockchain as a fundamental technology. Right? We're trying to reduce time to settlement. We're trying to make settlements safer. You know, the way the system is built is we'll have daily settlement windows, so you're not gonna have to wait t something, you know, for the settlement to occur.

So because of the upgrades through the AnchorageStack blockchain technology broadly, you know, we can apply some of these things in conjunction with the learnings from traditional platforms and and the way things are done to come up with, like, a infrastructure upgrade. And that's that's kind of really what we're driving at with this product, I think. Like, if I had to have one sentence, this is kind of like an infrastructure upgrade, leveraging a lot of the best learnings

from the traditional space and applying them to the reality of where we are where yeah. So that's that's kind of how I think about that question. This sorry if this this is gonna go more I'm gonna go more back on, like, the personal macro side, like, just thinking about your career arc. Where do you see your career ending? Right? Like, you've you've you've made this leap. You said, wanna make digital assets my career. You know, you're four years into it now. Like, where do you see it going?

Like, kind of like a job's not done, you know, approach. We're still so early even though the space has been progressing so fast. Where where do you wanna see Oh, man. Well, I I hope my job's not done soon. So Hey. Yeah. I'd like to be working at Anchorage. But

Yeah. I I think it's interesting. Like, I I haven't had a moment here at Anchorage yet where I've become really antsy. Like, I think what we're building is interesting. Like I kinda said in the beginning, the FX market got highly commoditized, and what I was doing wasn't that dissimilar from my my competitor, the other firm that was, you know, down the street. I haven't really experienced that yet here.

There's products that are being built within the Atlas ecosystem and even more broadly at Anchorage that are in different phases of their development. There's, like, a lot more to do here. So I guess what I would say there is I wanna continue what's I wanna I wanna see see this out. I wanna see the network adoption curve hit that hockey hockey shape.

You know, we have hundreds and hundreds of customers using the Atlas network, but I wanna see throughput and volume and activity that's at x x x level of where it is now. There's product development work. There's BD efforts. There's just a lot of a lot of things to do. So

I guess for now, like, I wanna see it through. What are those key Yeah. Are those key hurdles that you see, like, between now and the hockey stick? Like, what are the things that you feel like either internally within the firm or externally as a space we need to achieve to really feel like we're getting to that place?

Yeah. I think some of the unlocks for Atlas will definitely go back to I sort of mentioned it. You know, the advent of genius was great, getting clarity on clarity and, you know, opening that up as a way for more traditional market participants to feel highly comfortable, entering the ecosystem. You know, there's the people have been building, but the deployment will speed up as more clarity comes there. So I think that's a big external trigger.

You know, I think the advent is something we're hyper focused on internally is, you know, the advancements we can make through AI tooling and the scale we can get from that. So I think the firms that compete there will have an edge. And then it's just execution. We know what we need to do. We're getting really good indications from the market that we're on the right path in my business, so we'll execute. We need to grow. We need to increase activity.

We need to lean into other services that support or complement Atlas, like our fiat banking capabilities. So that's that's what I would say. I think, you know, we gotta keep doing what we're doing. Hopefully, we'll get some tailwinds, external market forces. And at Anchorage, we'll just keep serving institutional clients, you know, to the best of our ability and and building in in in their name. So, yeah, that's what I would say there. Amazing. Awesome. Amazing. How can we how can we as, like, market educators?

I think the idea of making it make sense is how we see success for our business. Like, we really you know, we wanna be the the new Bloomberg in a sense of, like Yeah. How traditional finance leans on a brand like that for education, for going a level deeper, trust, authority, credibility. Like, the these are these are terms that we want associated Yeah. With StableDash.

Like, given what you've seen so far in the conversation, like, what areas of this conversation or principles have not been explored adequately enough that we should I would even say, like, going back to 2017,

you know, AJ, you're at Citi, and you're like, oh, I made my first trade. This is amazing. I'm ready to dive deeper. Like, you know, I imagine a lot of this was this this self education process. You know? What what resources would you what resources would you want to see exist that didn't exist or maybe still don't?

Yeah. No. I appreciate that. Yep. I mean, Drew and Zach, what you're doing is great. Like, just providing a channel or a means for people to get educated and hear opinions that like mine, that are hopefully useful. But so I think you guys are helping that narrative for sure. You know, personally, what what I like to do is when I'm thinking about educating, it's like I you know, the product is Anchorage has a list of products.

Like, we have a settlement network, But the product for the client is always something different. Like, what is the outcome they're trying to achieve? Right? Mhmm. So it's always reframing things in the guise of, like, the audience, you know, versus pitching or promoting something that the product is whatever your client says the product is. The the product is prime brokerage, and the primitives that you're building supported are spot settlements and CMS. The product is not spot settlements.

The product is prime brokerage. So I'm always trying to, like, flip the framing when I'm talking talking with someone, and I think I think that's helped me and more personally, anecdotally. But I think what you guys are doing is great. 2017 was a crazy time. You have sort of had to learn by doing you had to lose a little bit of money. You had to make some mistakes on MetaMask. I think we're at at a different phase in the life cycle.

You have to buy a bunch of generative art NFTs on Tezos that, you know, all went to the end, which I did.

I think we all had, like, one of these moments where it was like, oh, this is gonna work. I I generative generative art is a perfect example of one. I also kinda bit the bullet on that one where just like, man, I definitely had a couple conversations where I probably lost a little bit of credibility of, like, convincing someone that was like, man, this is gonna be huge. Like, do you understand This is the next wave. This is the space. Do understand the impact of NFTs?

And it is Thanksgiving dinner table conversation on Bitcoin was a little bit had a little bit better staying power than the generative NFT. Yes. You and my mom my mom over the weekend. We're on, like, a family little trip for my mom, and she's like

you know, I I have her set up with, like, a DCA on Cash App. I'm like, mom, just, like, 20 a week. Just don't even look at it. She's like, Drew, Bitcoin's down. What's going on? I'm like, mom, have some perspective. You're gonna be fine. Long game. You know? Long game. So we'll we'll just stick to that one with mom, I I think, for now. That's a trustworthy one. That's good. I like the chance. AJ, final thoughts. We'd one, we'd love to have you back.

Also, we'd love to cover more of the Anchorage ecosystem over time because you guys are doing so much. What should we be on the lookout for in the near future from you, from Atlas, from the team? What's some final thoughts before we close? Yeah. I love it. I would say, mostly, final thoughts would be stay tuned. Over the coming weeks and months, you're gonna see more partnership announcements around CMS. We're doing a lot of things in the collateral management stack.

We're adding names to the platform, you know, week over week. So, you know, I'll make sure to highlight those to you guys, and any shouts you can give into your networks or on your show for us, that would be well appreciated. So I'll say definitely we're gonna be hosting a lot more conversations,

more on the forex side of things. So if you have any thoughts, conversations, framings, data to bring to life, I'd say we'll we'll definitely be keen to dive into those two. Excellent. We have a

research report that should be now should be launched actually next week is the hope, all about that topic. And then we we're actually piloting a new research series, and I think one of the topics is gonna be this specifically. So maybe you can come back and contribute to that, and we'll have more targeted, like, you know, specific questions we can send ahead of time just to provide insight. Love it. We're gonna be doing more of that stuff too. So teaser on our side as well. But, AJ, thanks.